Correlation Between Visa and Lipocine
Can any of the company-specific risk be diversified away by investing in both Visa and Lipocine at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Visa and Lipocine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Lipocine, you can compare the effects of market volatilities on Visa and Lipocine and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Visa with a short position of Lipocine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Lipocine.
Diversification Opportunities for Visa and Lipocine
Very weak diversification
The 3 months correlation between Visa and Lipocine is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Visa is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Visa Class A are associated (or correlated) with Lipocine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipocine has no effect on the direction of Visa i.e., Visa and Lipocine go up and down completely randomly.
Pair Corralation between Visa and Lipocine
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.19 times more return on investment than Lipocine. However, Visa Class A is 5.25 times less risky than Lipocine. It trades about 0.08 of its potential returns per unit of risk. Lipocine is currently generating about 0.01 per unit of risk. If you would invest 21,430 in Visa Class A on August 23, 2024 and sell it today you would earn a total of 9,309 from holding Visa Class A or generate 43.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Lipocine
Performance |
| Timeline |
| Visa Class A |
| Lipocine |
Visa and Lipocine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Lipocine
The main advantage of trading using opposite Visa and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Lipocine can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lipocine will offset losses from the drop in Lipocine's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Lipocine vs. Reviva Pharmaceuticals Holdings | Lipocine vs. ZyVersa Therapeutics | Lipocine vs. Unicycive Therapeutics | Lipocine vs. Checkpoint Therapeutics |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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